Blog Post

Can property licensing deliver better housing for renters?

Zarin Mahmud explores the evidence that property licensing can help London’s renters and why councils lack the power to expand it.

Families in London are living in substandard housing

The role of the private rented sector in London has changed in recent decades.

The housing system in London increasingly relies on the private rented sector to accommodate low-income households who cannot find social housing. With nearly 30 per cent of London homes privately rented, the typical renters are no longer mainly young professionals, but often families with children.

However, as demand for rented accommodation in London has grown, so too have the issues of unregulated rent increases, unsafe living conditions, and housing disrepair.

Indeed, the problem of rogue and low-quality landlords within the private rental sector in London is well-known – nearly one fifth of London’s private rental accommodation does not meet basic housing standards.

What is property licensing?

One solution is property licensing.

Licensing schemes require people renting out residential properties to register their property. They typically require detailed information about the property’s characteristics and occupant numbers, safety documents, and a claim to be a ‘fit and proper person’ to let the property.

Over a third of London’s boroughs operate ‘selective licensing’ schemes. Selective licensing schemes operate within certain areas.

Landlords who rent out properties in these areas must purchase a license from the local authority for each of their properties, which can range between £500 and £1000 for a five-year license. Licensing gives councils more power to investigate properties and take necessary action if they are found to be unsafe.

Some selective licensing schemes are borough-wide, for example in Barking and Dagenham, but most are enforced in particular wards (Ealing) or on certain streets (Hammersmith and Fulham).

London’s councils lack the power to expand licensing

We have evidence that property licensing works.

Generation Rent, a campaign advocating for renters’ rights, found that in 2019-20, councils with licensing identified a much greater number of homes with hazards and resolved a higher percentage of cases compared to councils without licensing.

So why isn’t it happening across London? One key reason is councils don’t have the power to implement these ideas widely.

Licensing schemes which cover more than 20 per cent of the borough must be approved by the Secretary of State.

Whatever the size of the area, councils need to demonstrate that the area is experiencing high levels of anti-social or criminal behaviour as well as poor property conditions.

This can be a resource-intensive and expensive process for councils and is not always successful.

And because in most cases, property licensing is only approved for a selection of areas within a borough, it’s easy to understand why many choose not to apply.

The Mayor of London has argued that devolving more power to London’s city government could improve the private rented sector in the city by making the system of licensing more consistent across London’s boroughs.

Central government and property licensing

With power still held by central government, how likely are they to support this agenda?

Many renters’ organisations have welcomed the government’s announcement that they plan to implement a national landlord register, which would collect basic data about all landlords.

A national landlord register could complement local property licensing, by providing comprehensive data to improve enforcement and achieving economies of scale to reduce the financial burden on landlords.

On the other hand, the government may view a national landlord register as the alternative to local property licensing. If this happens, they may not want to approve property licensing in more local areas, which would dilute regulation of rogue landlords.

And of course, the government’s plans may change now we have a new Prime Minister.

Getting a better deal for renters

Who holds the power to regulate property is important but shouldn’t distract from the main problem – too many of London’s private tenants are living in unaffordable, poor-quality homes, with a constant fear of eviction or unfair rent hikes.

The entire political system needs to do more.

There is evidence that property licensing can be a useful tool. The challenge now is learning from local successes to design a scheme to make life better for renters across London.

Our new research project at Centre for London will do this by exploring boroughs’ experiences with selective licensing and what their residents need.

Zarin Mahmud is a researcher at the Centre for London.